Busted: Bankers and The Global Economy

June 7, 2008

Wall Street: Distractions and Insecurity

The media is once again focusing on the insecurity of Wall Street. The insecurity has never really left. Only the distraction of profits and money to be made has given Wall Street any relief from the feeling of doom.

Many investors thought the financial sector bottomed-out in March when JPMorgan Chase rescued Bear Stearns from the brink of collapse. Now there are worries that Lehman Brothers Holdings Inc. is facing a serious cash shortage.

What is new about this? Rumors have circulated about Lehman Brothers and other investment bankers on Wall Street at the same time that Bear Stearns saw its demise. Bear Stearns fell first.

Like Bear Stearns, Lehman says that it has plenty of money, but claims to be looking for more capitalization. The vernacular of “capitalization” is the new keyword of the U.S. financial crisis. Increasingly, strapped banking institutions are seeking more and more capitalization as the fruit of their old banking standards comes to rest.

This is tantamount to the admission of trouble. Not a single human being alive really has a clue as to where the bottom really is. Anyone that does is engaging in fanciful thinking.


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